-- Despite arguments to the contrary, the aging of baby boomers
won't lead to less demand for housing and lower housing prices
in the coming years, a new study suggests.

In forecasting lower housing prices, some analysts have pointed
to a study that found people over age 70 in 1980 demanding much
less housing than people in their 50s. As a result, as the large
baby boomer population passes through age 70, the argument has
been that the market for houses -- and housing prices -- will
plummet.

But that's not likely to happen, said Patric Hendershott, co-author
of the new study and professor of finance at Ohio State University's
Max M. Fisher College of Business.

The reason has to do with education. People with lower education
levels -- and consequently less income -- have lower demand for
housing.

"Seventy-year-olds in 1980 had far less education and income
than 50-year-olds, due to the surge in education after World War
II," Hendershott said.

"But baby boomers, because of their higher education levels,
and thus higher lifetime earnings, will have a lot more income
when they retire than did previous generations. As a result, they
aren't likely to cut back on housing demands. Aging alone should
not trigger declines."

Hendershott conducted the study with Richard Green, a professor
of business at the University of Wisconsin. Their study was published
in a recent issue of the journal Regional Science and Urban
Economics. In the study, the researchers used 1980 U.S. Census
data to examine how age, education and income affected the willingness
of people to buy houses and what kind of housing buyers wanted.

The results showed that older people in 1980 had significantly
less education than younger people. About 15 percent of those
aged 24 to 34 were college graduates, compared to less than 5.5
percent for those over age 64.

Educated people also had greater housing demands, the study found.
People with higher levels of education were more likely to want
newer houses, condominiums, and houses in urban areas. Highly
educated people also wanted houses with more bedrooms and more
bathrooms than those with less education and were more likely
to demand central air conditioning.

"The argument that housing demands of today's 50-year-olds
will decline as they age ignores the fact that their education
will not decline," he said. "As a result, their income
will not decline as sharply and they will have more to spend on
housing, all else being equal."

That doesn't mean that housing prices will not decline for other
reasons, Hendershott cautioned. Many other factors, such as interest
rates, also have an impact on prices. But, he added, "demographic
changes over the next three decades are likely to be so modest
that they almost certainly will not have a significant impact
on housing demand and prices."

Results of the study suggest that housing demand will rise about
10 to 15 percent a year until 2030, mainly due to rising population
in the United States. That is far less than the 39 percent and
23 percent increases in housing demand during the 1970s and 1980s,
respectively. Those were the decades when baby boomers first entered
the housing market, swelling demand, Hendershott said.